Four reasons to consider a mortgage from a credit union
The housing market is booming, and as home sales continue to increase, so does the demand for housing. Pending home sales have climbed 27% year over year, and new listings of houses for sale have increased by 6% within the last year, according to Redfin. Choosing where to acquire a mortgage is a crucial decision—it’s vital to find a mortgage that works best for you and your needs, and where you’ll find the best rate, so you can save money in the long run. If you’re in the market for a home, consider these four reasons to obtain a mortgage from a credit union.
A credit union is a not-for-profit financial institution that is owned by its members rather than shareholders, so it’s able to return profits to and invest in members. That’s why credit unions can typically offer lower rates on loans. As of June 2020, a 30-year, fixed-rate mortgage with a credit union has an average APR of 3.43%, according to the National Credit Union Association. However, a mortgage with the same terms but from a bank has an average APR of 3.52% higher. Even though the difference is small, it still helps you save money in the long run.
For example, if you purchased a home for $300,000 with an APR of 3.43%, your monthly payments would be $1,335. If you buy the same house but had an APR of 3.52%, your monthly payments would be $1,350. You would save more than $5,000 in interest throughout your mortgage period. Dozens of factors determine your APR and providing a loan, so the best way to know what rate you qualify for is to contact the financial institution directly for a quote.
There are dozens of costs and fees associated with acquiring a mortgage—closing costs, origination fees, vendor fees, and other processing costs. Credit unions prioritize helping people over turning a profit. So, when you obtain a mortgage with a credit union, origination fees and processing costs are often reduced. These reduced fees can save you thousands of dollars.
Less likely to sell your loan
Lenders typically sell a mortgage for two reasons: they need to open more lines of credit to lend money to other borrowers, and they make money from the sale. Usually, having your mortgage sold isn’t a big deal. However, when your mortgage is sold, this can sometimes result in confusion regarding where you should make your payment. If your payment is made to the wrong institution, you could incur late fees. Credit unions don’t typically sell their mortgages because their ultimate concern is to preserve the relationship between the institution and the member. Banks, however, are more likely to sell your loan. Even though credit unions don’t often sell their mortgages, it’s best to refer to your contract just to be sure.
Credit unions are often more attuned to their members’ necessities, so they tend to offer a personalized experience. They normally serve a select area, so they’re able to focus on what specifically will benefit its members or how they can help when members are in need. For example, throughout the COVID-19 pandemic, many credit unions helped members alleviate financial burdens by providing mortgage forbearances or deferments. Credit unions are dedicated to preserving the relationship between its members and ensuring their best interest is served. Plus, it’s easier to receive services through an institution with which you have a relationship.
If you’re not a member, you can easily obtain membership to a credit union. At Georgia’s Own, there are a few simple ways you can become a member. If you meet the requirements and are approved, all you need is a $5 deposit to establish your membership, which represents your share in the Credit Union. Requirements at other institutions vary.
If you’re purchasing a home, consider Georgia’s Own for all of your financing needs. We offer low rates, up to 100% financing, a program for first-time home buyers, and more—we even provide refinancing. Ready to start making memories in your dream home? Click here to learn more about our mortgage options or apply today.